Supreme Court declines to hear VA Rule of Two challenge

The U.S. Supreme Court declined to hear a case Monday that could have upended the Rule of Two’s priority over the AbilityOne program for U.S. Department of Veterans Affairs’ procurements.

The denial of a petition for a writ of certiorari—that’s Supreme Court-ese for a request to hear the appeal—ends a saga that has been several years in the making and effectively cements the supremacy of the Rule of Two over the AbilityOne program when the VA is purchasing goods and services.

The case, Winston-Salem Industries for the Blind v. PDS Consultants Inc., involved the conflicting language between the Javits-Wagner-O’Day Act (or JWOD) and the Veterans Benefits, Healthcare, and Information Technology Act (the VA Act).

The VA Act requires the VA to set aside procurements for SDVOSB or VOSB concerns if it expects at least two offers at fair and reasonable prices, frequently called the Rule of Two. Meanwhile JWOD requires all agencies (VA included) to prioritize awards to nonprofits that employ blind and disabled persons when purchasing items included on the AbilityOne List. Because these two statutes conflict, there has been confusion over which controls.

This particular case began shortly after the Supreme Court’s landmark Kingdomware Technologies decision in the summer of 2016 which held broadly that the Rule of Two is mandatory and applies to all VA procurements. That August, AbilityOne voted to add certain eyeware products and services to VA service network 6 (the same goods and services were already on the AbilityOne list for VISNs 2 and 7).

Later that month, PDS Consultants, Inc., an SDVOSB, challenged the inclusion at the Court of Federal Claims. The court ruled that the Rule of Two must be followed before procuring goods or services off the AbilityOne list. The government and Winston-Salem Industries for the Blind (an AbilityOne contractor) appealed the decision to the U.S. Court of Appeals for the Federal Circuit.

There the government argued that the Rule of Two applied only to competitive awards, not the non-competitive awards to AbilityOne contractors. The Federal Circuit disagreed in part because the Kingdomwear decision said that the Rule of Two applied to all VA contracts.

Further, the Federal Circuit said that where statutes conflict, the specific statute controls over the broad rule. The court held that the Rule of Two was more specific than JWOD because it is limited to the VA while JWOD applies to all federal agencies.

Likewise, when statutes conflict, the more recent of the two controls, according to the Federal Circuit, because the lawmakers are presumed to be aware of the older rule when they adopt the new one. JWOD dates back to 1938 while the VA Act is from 2006.

Following the Federal Circuit’s decision, the VA issued a class deviation explicitly confirming that the Rule of Two takes priority over AbilityOne procurements.

Not wanting to give up the fight, Winston-Salem Industries asked the Supreme Court to hear the case. Several industry groups including the American Council of the Blind, the National Industries for the Blind, and a group of 14 other nonprofits (including Alphapointe, an AbilityOne contractor who recently lost a VA contract to an SDVOSB set-aside) filed briefs in support of Winston-Salem Industries.

It was all for naught though, as the Supreme Court’s denial of the writ upholds the Federal Circuit’s decision. While this is a blow to AbilityOne, it confirms that for the VA, and the VA alone, the Rule of Two is king, which ultimately makes sense given that the mission of the VA is to support the nation’s veterans.